Indian Asset Managers Have Potential to Become Global Players, BFSI Summit Says

New Investment Products Could Deepen India’s Wealth Market

The next phase of India’s asset-management growth may depend on serving investors whose needs sit beyond conventional mutual funds.

Products are carving out space between mutual funds and PMS

India’s wealth-management industry is adding options for investors who want more tailored portfolios than conventional mutual funds may offer, but are not necessarily seeking a traditional portfolio-management service. At the summit, fund managers argued that these products can serve distinct needs rather than simply shift money between existing categories.

Specialised investment funds, or SIFs, sit between mutual funds and PMS, with a minimum investment of ₹10 lakh and greater flexibility to use derivatives and options. A new PMS category with a ₹25 lakh threshold is also expected to widen access. The difference in minimums and investment flexibility matters: these are not interchangeable products, and investors need to understand the mandate and risks before choosing one.

The potential audience includes affluent investors, family offices and households whose financial needs become more complex as wealth grows. The broader case is that additional product choices could bring new investors and needs into professionally managed portfolios, rather than merely divide the existing mutual-fund market.

Early SIF growth is notable, but distribution remains narrow

SIFs have attracted ₹36,000 crore-37,000 crore and more than 150,000 folios in their first year. That is meaningful for a new category, but still small beside mutual funds, whose assets stand at ₹82 trillion-83 trillion and which have an estimated 250 million-300 million folios. The comparison highlights both the opportunity and the scale of the challenge: early interest does not yet amount to broad adoption.

Distribution is one constraint. About 11,000-12,000 distributors are equipped to sell SIFs, compared with more than 200,000 across mutual funds. Simplifying the relevant National Institute of Securities Markets certification from Series 13 to Series 5G, alongside training from fund houses, could help expand that network. But wider availability will also depend on whether investors can understand the strategies and access them conveniently.

The products cover equity, fixed-income and hybrid strategies. Some use derivatives to seek returns above an arbitrage fund or to pursue benchmark-plus returns alongside an equity portfolio. Their flexibility may help shape different risk-return profiles, but does not remove investment risk or ensure a particular outcome.

A difficult market is a reminder to judge strategies over time

One fund manager noted that nine of the previous 13 months had seen negative market returns, making the period unusually challenging for equity investors. That backdrop makes short-term performance a limited test of a strategy, particularly one using derivatives or seeking returns relative to a benchmark. The panel’s view was that one year is too short to draw firm conclusions under abnormal conditions.

The advice was to put long-term asset allocation ahead of forecasts for the next few months. Strategic allocation should guide decisions, with tactical adjustments playing a smaller role. For investors, this puts the focus on whether a product fits their objectives, risk tolerance and overall portfolio—not simply on its recent returns or the appeal of a more flexible strategy.

Technology and global ambitions could shape the next stage

Fund managers also pointed to technology as a way to make specialised investment processes more manageable. Artificial intelligence is being used in research, idea generation and risk management, with one panelist saying tasks that once took two to three hours could now be completed in minutes. That could help smaller teams handle more work, though technology alone cannot establish investor demand or prove a strategy’s performance.

The longer-term ambition extends beyond domestic wealth management. Carnelian Asset Management founder Vikas Khemani said Indian asset managers could become global players, with Gujarat International Fin-Tec City potentially serving as a base for emerging-market funds for Indian and international investors. This remains an ambition, not an established outcome; growth will depend on product development, distribution and the ability to build investor confidence. The panel also noted that allowing independent managers to use an existing manager’s infrastructure could reduce operational and compliance burdens for smaller teams.

Key Highlights

• SIFs have attracted ₹36,000 crore-37,000 crore and more than 150,000 folios in their first year.
• SIFs have a ₹10 lakh minimum investment; the new PMS category is expected to have a ₹25 lakh threshold.
• Mutual funds remain vastly larger, with assets of ₹82 trillion-83 trillion and an estimated 250 million-300 million folios.
• A much smaller trained distributor base is a key hurdle to wider SIF adoption.
• Panelists urged investors to prioritise long-term asset allocation over short-term market calls.
• Technology and access to shared infrastructure may help smaller managers develop and operate specialised strategies.

Investor Note: New categories can broaden choice, but greater flexibility may also bring strategies that are harder to assess. Investors should examine a product’s risks, portfolio role and time horizon before investing, and avoid treating early category growth as evidence of future returns.